RX8Club.com - I Need Guidance

Hey Everyone,

I have been a long time lurker on rx8club until this huge problem has hit me. I have had an Rx8 for about 4 years now. I purchased a 2005 rx8 in red with only 50k miles on it in 2014. I purchased the extended warranty because i knew the apex seals fail regularly and i wanted to cover my ass. When I pulled it out of storage and went to autozone to replace a burnt out break light i spotted an oil leak under the front driver side I immediately checked the oil called a tow truck and purchased a few quarts from autozone. When i got it home we found a rusted oil cooler line. Figured i had the warranty trailered it to my local mazda dealership and had them look it over and start a claim the mechanic suggested we do a compression test since its at 74k miles and it wouldnt hurt. First rotor numbers are bad second rotor is within parameters needs replaced. Warranty company told me that they wont cover the oil cooler line because of rust its in the fine print. Im pissed but i understand fine print got me. But the engines bad i will cover the lines you pay for the engine, thats why i got this warranty. They proceed to tell me the oil cooler rusted line caused the engine to fail and its my fault denied. The dumb question is what do i do. I owe around $4500 on the car it only has 75k miles but the oil cooler line is cracked and the engines bad. Its not my main means of transportation. Who buys a broken car? I cant afford to fix it. If the repair bill out costs the value of the car can i total it? Im just looking for guidance what are my options.